I’ve been asked frequently over the last few weeks, what am I mostly concerned about for the markets? In the short run, a contested election, combined with a significant spike in Covid-19 cases in the US and abroad. We are certainly now witnessing an increase in new cases, as was expected. With the election, I believe we’re in a little unchartered territory. Over 56 Million people have already mailed in ballots, which hopefully will prove in the end, to be very positive, if we don’t experience voter fraud as some suggest.
In the end, my sincere hope is we have clear winners for the President, Senate and House of Representatives shortly after election day. The market does not like uncertainty.
Stimulus talk has been keeping the market optimistic and looking forward. I’m guessing at this moment stimulus will not happen until after the election. The election results will determine the amount, and who gets what. It’s a shame that politics is number one over the needs of the US Citizens, on both sides. Hopefully this week, I’ll be proven wrong!
I do expect some bumpiness over the next few weeks for the markets in both directions. However, the upcoming stimulus, a very dovish Federal Reserve should provide significant support in due time.
Markets for the Week
Last week most major indexes retreated in the US as the Dow dropped (.90%), the S&P 500 (.51%) and the Nasdaq Composite (1.06%). Small caps bucked the trend rising .42%.
International stocks rose as developed market equities were up .11% and Emerging Markets 1.11%
The 10 Year US Treasury yield rose for 6 days in a row to finish last Friday with a yield .84%. It’s kind of curious as to why so, at this time. This led the Barclay’s Aggregate Bond Index to lose .42% for the week. Today, the 10 Year yield is dropping a bit as the equity futures are down as I’m typing. This is certainly something to keep our eyes on as historic low bond yields are partially responsible for the markets gain over the last couple of years.
Big Earnings Week/GDP
Apple, Amazon, Alphabet, Facebook, Microsoft and many other companies report 3rd quarter earnings this week. As the election and other issues are extremely important, it will be important to see how some companies have rebounded and others haven’t over the last few months. I expect overall earnings to be judged positively because of the pandemic, however the markets will quickly turn focus towards earnings prospects for 2021 based on our upcoming information.
This Thursday we should hear a large Gross Domestic Product (GDP) number for the 3rd quarter. Many are predicting over 30%, which should be expected after such a large drop in the 2nd quarter.
Stay tuned, as the election, coronavirus, & stimulus move forward, there shall be much to discuss!!
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Preliminary Key Data
The preliminary 2021 Key Data is now live on our website! This handy reference guide includes the 2021 tax rate schedule, standard deductions, and a lot more! Click here to check it out. Please remember this data is preliminary and may be subject to change.